Canada Inflation

Canada: Inflation rises to nearly two-year high in March

April 17, 2014

In March, consumer prices increased a seasonally-adjusted 0.2% over the previous month, which was slightly below the 0.3% rise recorded in February. According to Statistics Canada, the overall price increase reflected higher prices in four of the eight categories measured, with alcoholic beverages and tobacco, as well as shelter, registering the largest gains. Conversely, the largest price decline was registered in the recreation, education and reading index.

Annual headline inflation rose from 1.1% in February to 1.5% in March. The print marked the highest inflation rate since April 2012 and was slightly above market expectations of a 1.4% increase. Inflation remains within the Central Bank's tolerance margin of plus/minus 1.0 percentage points around its target of 2.0%. Meanwhile, annual average inflation inched up from February's 1.0% to 1.1% in March, thus indicating a positive trend. Core annual inflation, which excludes volatile items such as gasoline and fresh food, edged up from 1.2% in February to 1.3%.

According to its April Monetary Policy Report, the Bank of Canada expects headline inflation to average 1.4% in 2014 and 1.8% in 2015. FocusEconomics Consensus Forecast panelists expect inflation to average 1.6% in 2014, which is unchanged from the previous month's forecast. The panel expects inflation to average 1.9% in 2015.

Author:Armando Ciccarelli, Head of Data Solutions

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On 1 October, after more than a year of tense negotiations, Canada and the United States agreed to maintain their longtime free-trade relationship, seemingly ending an uneasy chapter of neighborly brinkmanship that, only months ago, had threatened to upend the continent’s trading landscape.

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